by Kim | Jan 25, 2021
Mostly US-focused data releases and the FOMC meeting this week.
The US FOMC two-day meeting will be held this week with the policy decision announced on Wed 27 Jan. The expectation is for rates and other policy settings to remain unchanged. The press conference is likely to shed further light on recent comments regarding the tapering of asset purchases and inflation targets.
The main US data releases this week will be the University of Michigan consumer sentiment for the second half of Jan. Talk of a further stimulus package (but running into roadblocks?) and the ramping up of vaccinations are likely to result in some improvement in sentiment.
US Q4 GDP will be released this week.
The PCE price index for Dec (as well as income and expenditure) will also be released this week. This is the Fed preferred measure of consumer prices. Anecdotes from various PMI’s reflect some price growth pressure for inputs but not all firms or sectors have passed these price increases on. Services price growth is likely to provide an offsetting effect.
We continue to follow the initial jobless claims as one of the higher frequency indicators of employment improvement – last week, initial claims for Federal programs were notably higher as programs were extended. Total initial claims remained elevated at +1.38m last week.
In Australia, the Q4 CPI will be released. This will be an important input into the RBA meeting on rates next week.
The US Fed purchases of Treasuries will be much lower this week, but MBS purchases will be significantly higher. The Fed plans to purchase $10.7bn in US Treasury securities this week (last week $16.6bn). The Fed will continue to purchase MBS at a faster rate, this week buying $36.02bn in MBS ($23.9bn last week). The Fed target for MBS purchases is approx. $40bn/mth.
US Treasury issuance will be slightly heavier this week. The US Treasury will settle approx. $334bn in ST Bills and 10yr TIPS, raising approx. $5.8bn in new money.
This week, approx. $25bn in Bills will mature on the Fed balance sheet and will be rolled over.
This week, the US Treasury will also auction approx. $235bn in Notes, FRN’s, and Bonds, raising approx. $106bn in new money and will settle next week.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net.
by Kim | Jan 18, 2021
The main highlights for this week are the Inauguration of Joe Biden as the next US President, the prelim global PMI’s for Jan, and the ECB and BoJ interest rate decisions.
This week, Joe Biden will be inaugurated as the next US President. Four areas have been highlighted for “urgent action” by the new administration: Covid-19 vaccination roll-out, further economic stimulus ($1.5tr relief plus $15min wage with infrastructure spending to follow), racial equality, and climate change.
This week, the ECB and the BoJ will meet on interest rates. It will be a quiet week for the US Federal Reserve ahead of the FOMC meeting next week.
The prelim global PMI’s for January will be released this week. This should provide some insight into momentum across the major economies coming into 2021 – especially given the level of infections & subsequent restrictions in place across many of these economies.
In the US, the key data releases will be initial and continuing jobless claims. Last week there was a notable rise in initial claims – which could be a seasonal increase after the holiday period. Data for new building permits and housing starts in Dec will be released this week.
In Australia, the labour market and employment survey for Dec will be released. This is a key data point for the RBA and interest rate policy.
The US Fed purchases of Treasuries will be slightly lower this week given the short week. The Fed plans to purchase $16.6bn in US Treasury securities this week (last week $26.6bn – updated). The Fed will continue to purchase MBS at a faster rate, this week buying $23.9bn in MBS ($28.3bn last week – updated). The Fed target for MBS purchases is approx. $40bn/mth.
US Treasury issuance will be lighter this week. The US Treasury will settle approx. $285bn in ST Bills this week with no increase in new money for the week.
This week, approx. $21bn in Bills will mature on the Fed balance sheet and will be rolled over.
This week the 10yr TIPS auction will take place (raising approx. $15bn in new money) and will settle next week.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net.
by Kim | Jan 11, 2021
The weekly macro review for w/c 4 January 2021 – It was a turbulent week with further social and political unrest in the US, some weak data points, and continued peaks in Covid-19 infections and deaths.
In the US, the Democrats won the two Senate runoff races in Georgia. The Democrats will now lead a 50-50 split Senate for the next two years, with Democrat Vice-President Harris to cast the deciding vote. This opens the way for the Democrat agenda. By the end of last week, it was rumoured that another round of relief spending would be considered in the vein of $US3-4tr – made up of another round of one-off payments and infrastructure spending. This would be in addition to the $900bn in relief aid already passed.
The US non-farm payrolls last week highlighted the adverse impact of this current, more severe wave of Covid-19 cases. New peaks in cases and deaths continue to be recorded in the US. In many cases, local restrictions resulted in a severe decline in services (leisure and hospitality) payroll jobs in Dec. This was partially offset by increases across some services jobs such as trade, transport, and retail, as well as increases in goods-producing jobs. The household employment survey was little changed in Dec. The increase in employment was small – but was at least made up of higher growth in full-time jobs (offset though by a severe decline in part-time employed persons).
The main themes from the ISM’s were ongoing and increasing business disruptions from the current wave of infections. Supplier lead times continue to lengthen, led by transport and human resource constraints. There was a notable increase in the proportion of firms reporting higher input prices this month – especially across some commodities. Underlying demand conditions were surprisingly resilient given the disruptions.
The global PMI reports for Dec were generally stronger across manufacturing while services remained weaker. Across several larger economies – Germany, UK, and Japan, new peaks in infections have led to a further tightening of restrictions. This will likely impact the results for the next month.
There are more data releases covered in the review document. Use the links on the contents page to navigate to different country sections. Download the review here;
The macro outlook for w/c 11 January 2021 – The highlights this week will be key data points, several Fed speeches, and the ongoing US political and social unrest.
After a tumultuous week for the US, the focus is likely to remain on US politics. One of the important points will be how quickly (and how much) the new administration will move on a further round of stimulus/relief spending.
News of the rollout of Covid-19 vaccines continues to be overshadowed by rising infections and the re-imposition of restrictions. Last week, several major economies announced new shutdowns or restrictions including the UK, and countries such as Japan and Germany are also looking at further restrictions to reduce the growth of infections.
In the US, the key data releases will be retail sales for Dec, consumer sentiment for early Jan and, CPI for Dec. There will also be several US Fed Governor speeches including Fed Chair Powell on Thursday.
The new schedule of Fed purchases of Treasuries and MBS will be released on Thur 14 Jan, so the total value for this week is incomplete. So far, the Fed plans to purchase $13.8bn in US Treasury securities this week (last week $26.4bn). The Fed will also continue to purchase MBS at a faster rate this week buying $21.9bn in MBS ($28.8bn last week). The Fed target for MBS purchases is approx. $40bn/mth.
US Treasury issuance will be heavier this week. The US Treasury will settle approx. $405bn in ST Bills, Notes, and Bonds this week, raising approx. $63.6bn in new money for the week.
This week, approx. $19bn in Bills will mature on the Fed balance sheet and will be rolled over.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net.
by Kim | Jan 4, 2021
It will be a relatively full week for the first week of the New Year. In the US, the focus will be on the results of the two important Georgia Senate runoff elections this week. The results will determine which party will control the US Senate. The focus over the next few weeks will be on the transition to the new Democrat-led administration.
News of the rollout of Covid-19 vaccines is now starting to reflect a slower pace of vaccination than planned. At the same time, new infections continue to increase, and numbers are extremely elevated. Restrictions remain in place across many countries, mostly affecting services sectors this time around.
On the data front, global PMI’s for Dec will be released this week – providing some insight into the rebound across countries and regions. Restrictions across many countries are likely to see further depressed activity across services sectors.
In the US, the key data releases will be non-farm payrolls and employment for Dec, initial and continuing claims, and ISM PMI’s for manufacturing and services for Dec.
The minutes of the latest FOMC meeting will also be released this week.
The latest schedule of US Fed purchases of Treasuries and MBS has been released and purchases will be elevated relative to benchmarks. The Fed plans to purchase $26.4bn in US Treasury securities this week. The Fed will also continue to purchase MBS at a faster rate this week buying $28.8bn in MBS. The Fed target for MBS purchases is approx. $40bn/mth.
US Treasury issuance will be lighter this week. The US Treasury will settle approx. $285bn in ST Bills this week, with zero net new money raised for the week.
This week, approx. $19bn in Bills will mature on the Fed balance sheet and will be rolled over.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net.
by Kim | Dec 28, 2020
Highlights for the short week between the Christmas and New Year break include the sign off on the latest US government spending and relief bill and a light data week.
News of the Covid-19 vaccination rollout is running alongside reports of new outbreaks, new faster-spreading strains, and case flare-ups across several countries.
Last week, the UK PM announced further restrictions in response to the discovery of a faster-spreading strain of Covid-19. A further fast-spreading strain has since been identified in South Africa:
The British authorities have detected two cases of the South Africa variant, Mr. Hancock said. In both cases, the infected people had been in contact with people who had traveled to Britain from South Africa in recent weeks. Mr. Hancock said that those infected with the new variant and their close contacts would be quarantined, and that travel from South Africa would be restricted. https://www.nytimes.com/live/2020/12/23/world/covid-updates-coronavirus
The UK parliament will be recalled to vote on the Brexit trade agreement this week. EU members will review the agreement before a formal vote, likely later in Jan.
It will be a quiet week on the data front. The highlights include US initial jobless claims.
The latest schedule of US Fed purchases of Treasuries and MBS will be announced on 28 Dec. Last week’s purchases were lower, in line with the short week. Last week, the Fed purchased approx. $9bn in US Treasury securities and approx. $18.4bn in MBS.
US Treasury issuance will be heavier this week. The US Treasury will settle approx. $558bn in ST Bills, Notes, FRN’s, TIPS, and Bonds this week, raising approx. $188bn in new money. This brings the total of new money raised for the quarter to $575bn – which is approx 93% of the estimated requirement for the quarter.
This week, approx. $62bn in Bills, Notes, and Bonds will mature on the Fed balance sheet and will be rolled over.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net.
We wish all of our valued clients a safe and prosperous New Year.
by Kim | Dec 21, 2020
The weekly macro review for w/c 14 December 2020 – Last week we noted that sentiment across many countries had been buoyed by news of a Covid-19 vaccine. But this has not stopped the rolling outbreaks from continuing to affect economies and households. In many cases, countries or regions within countries are reinstating travel and distancing restrictions. This is affecting the trajectory of the recovery from the more severe shutdowns at the start of the year.
In the US, the severity of the current outbreak of Covid-19 is worse (absolute numbers) than at the start of the year. But this time there has been no nationally mandated shutdown or restrictions – this has been handled on a local basis. Data continues to reflect at least a slowing of recovery momentum. US manufacturing is faring better than services. Data for Dec is reflecting ongoing growth, just no further acceleration in that growth. Services activity slowed notably in Dec but stayed positive. Retail sales for Nov were weak – especially given the Thanksgiving holiday. Initial and continuing claims have been increasing again since Thanksgiving. A sizeable level of unemployment remains, and the US Congress appears to have finally made some progress on a relief bill to help fill the income gap through cash payments and an extension to benefits. The FOMC made no changes to its high levels of monetary easing. The Chairman reinforced that accommodative policy would remain in place until inflation at least averages 2%.
In Europe, restrictions had been imposed again in many countries through Nov and Dec. The Oct production data remained strong – led by stronger growth in Germany. The Dec data suggests some broadening of manufacturing growth among countries. Services remain weak as a result of restrictions.
In the UK, the severe decline in services activity in Nov eased in Dec. Unfortunately, this is likely to be short-lived as greater restrictions have just been announced to combat a new strain of the virus. This will impact the UK and also Europe, which imposed travel bans on the UK. Manufacturing activity was boosted in Dec somewhat by preparations for the final Brexit deadline. At this stage, there is no UK-EU trade deal yet ahead of the 31 Dec deadline. The BoE made no changes to the current stance of policy.
In Japan, the rebound in activity is mixed. There has been a recent rise in cases and some restrictions have been re-imposed. Manufacturing production continues to rebound and is still 3% below a year ago. The PMI recorded a contraction led by services, which declined at a faster pace in Dec. The Nov merchandise trade reflected some domestic weakness in demand as well as weaker global export demand. The Dec manufacturing PMI noted an accelerated decline in new export orders. The National CPI declined at an accelerated pace – even excluding fresh food and energy. This reflects some of the weakness experienced in the services sector. The BoJ announced that it will assess further options for ‘effective monetary easing’ likely to be announced at the Mar 2021 meeting (within the current QQE with YCC framework). The Committee judges that current economic activity and inflation will remain under ‘downward pressure’ for a ‘prolonged period’ due to the pandemic.
In Australia, local community transmissions flared up in NSW. The states have been quick to reimpose border restrictions. The Nov employment survey was more positive. Even though employment growth slowed, there was a slower increase in the supply of labour too. This helped to reduce total unemployment in the month. The one caution is that most of the employment growth was the result of the easing of restrictions in Vic while employment across several of the larger states declined in Nov.
There are more data releases covered in the review document. Use the links on the contents page to navigate to different country sections. Download the review here;
The macro outlook for w/c 21 December 2020 – Highlights for the short week leading up to the Christmas holiday celebrations include the announcement of a compromise on stimulus in the US, increased Covid restrictions, and US data.
News of Covid-19 vaccinations is running alongside reports of new outbreaks, a new faster-spreading strain, and flare-ups across several countries.
Over the weekend, the UK PM announced further restrictions in response to the discovery of a faster-spreading strain of Covid-19. European nations responded swiftly with border closures and flight bans, including the closure of the Channel Tunnel “for at least 48 hours”.
The travel restrictions come at a difficult time for many British companies, which are engaged in last-minute stockpiling before December 31, when a status-quo transition period with the European Union ends and new customs rules come into effect. https://www.abc.net.au/news/2020-12-21/european-union-nations-halt-uk-flights-over-covid-19-variant/13002548
A small outbreak of community transmission in Australia (NSW) has resulted in some border closures and social distancing restrictions to be reinstated.
US data is the focus this week. The highlights include initial jobless claims (which have been trending a little higher since Thanksgiving), personal income, expenditure and prices, and consumer sentiment leading into the end of the year.
The US Fed purchases of Treasuries and MBS will be lower in this shorter week. The Fed will purchase approx. $9bn in US Treasury securities this week (last week $31.2bn) and approx. $18.4bn in MBS (last week $27.9bn).
US Treasury issuance will be lighter this week. The US Treasury will settle approx. $310bn in ST Bills this week, raising approx. $22bn in new money. The US Treasury will also auction the FRN, 5yr TIPS, and 20yr Bond this week, which will settle next week. Approx $230bn in Notes and Bonds will be auctioned and settled next week, raising approx. $159bn in new money. This may be revised based on the final stimulus number and the TGA balance..
This week, approx. $10bn in Bills will mature on the Fed balance sheet and will be rolled over.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net.
We wish all of our valued clients a very happy and safe holiday!
